In Danny Boyle’s gripping Steve Jobs film, the talkie action is set before a series of product launches. The issue that’s repeatedly revisited by the Jobs character is the prime importance of technical development. In a tech company such as Apple, that’s hardly a surprising position, but there’s a sense in which that emphasis now seems a tiny bit old hat.
Jobs was also a stickler for design and in recent years a great deal of attention has been focused on Jonathan Ive, the British designer responsible for the style of the MacBook , iPad and iPhone, among other products. What sets Apple apart from its competitors, runs the consensus opinion, is the elegance and simplicity of the way its products look. But perhaps in Apple’s natural history, the design phase too has been replaced by a new stage of corporate evolution: the marketing stage.
Certainly, the news that Angela Ahrendts, Apple’s vice-president of retail and online stores, is, for the second year running, the tech giant’s highest paid executive suggests that her expertise in marketing is what’s being rewarded. And what a pleasant reward it is too. Her basic salary, stock grant and bonus totalled $25.8m last year, which is about $15m more than Apple CEO, Tim Cook, though he does possess stock options that could amount to half-a-billion dollars.
That said, Ahrendts’s 2015 remuneration was something of an impoverishing drop from the previous year in which she was paid a still more pleasant $73.4m, $37m of which was compensation for the Burberry stocks she said goodbye to when she left the fashion house in the spring of 2014 to join Apple, plus $33m in stock allocation by way of a big, warm Apple welcome.
That’s round about $100m in two years, give or take a couple of iPhones. In the baffling universe of hyper pay, that’s even more than what Wayne Rooney gets paid for not scoring very many goals for Manchester United. In other words, a lot of money.
What does Ahrendts, who studied merchandising and marketing at Ball State University in Muncie, Indiana, do to deserve that? Her big initiative is to make Apple stores more like luxury goods outlets. So, for example, personal appointments for Apple watches and showcasing high-end non-Apple items, such as the exclusive Phantom wireless speaker. She says she wants the more than 400 worldwide Apple stores to become “sleeker and smarter”.
At first glance, it looks as if she’s Burberrying Apple. She was a huge success at Burberry, where she established the UK’s only fashion super brand that could compete with the European houses of Louis Vuitton, Prada and Gucci. While she was boss, the company’s share price went up threefold and in 2013 she became Britain’s highest paid chief executive on the FTSE 100 company list.
But when she was there, her impetus was the other way round: she wanted to Appleize Burberry. When asked if she took inspiration from her fashion house rivals, she said in 2010: “If I look to any company as a model, it’s Apple. They’re a brilliant design company working to create a lifestyle and that’s the way I see us.”
Given subsequent events, it sounds like a job pitch, but she was paying testament to Apple’s advanced retail strategy. Much imitated now, the unstructured open-floor space, wandering sales assistants and hang-out atmosphere of Apple shops were all revolutionary when they first opened in 2001.
There’s something of the cult leader about her. She never let you see a moment of doubt or even questioning
But while it’s rare to unknown to pass an uncrowded Apple shop, sales had peaked and plateaued by 2014. And no multinational corporation likes to settle for vast profits, when there are potentially vaster profits to be made. Which is why Ahrendts was brought in, to take the company upmarket, which, it is hoped, means upped revenues.
Ahrendts’s background doesn’t spell high glamour, but that’s been her speciality. She grew up as one of six children in the small town of New Palestine, Indiana, where she attended the United Methodist church and got a grounding in midwestern humility. Her father instructed her against looking first for herself in photographs, while her mother set the demanding standards, telling her that she was not raised to accept “fine”. She remains a committed Christian, not unusual in corporate America, but it would have made her stand out in the more decadent setting of European fashion houses.
Her father was a businessman and her mother a housewife who did a spot of Indiana modelling. By all accounts, the young Ahrendts was a fashion head from an early age, sewing her own clothes and burying herself in her mother’s fashion magazines.
She had her heart set on becoming a designer but at university she realised other students had the talent and she had the opinions. A kindly professor took her aside and informed her: “We call that a merchant.”
So like countless ambitious midwesteners before her, she bought a one-way ticket to New York, where she found a marketing job with the bra maker Warnaco. She worked her way up gradually over the years until she became president of Donna Karan. It was in that job that she met Christopher Bailey, the designer with whom she would later go on to form such a successful partnership at Burberry.
The hope at Apple is that she can perform the same trick with Ive. More than any other tech company, Apple has built its reputation on design. Some would argue that it’s a triumph of image over reality. But as every marketing guru knows, image is reality. Apple is selling not just a product but an identity, and it’s there, in that lucrative interface, that Ive and Ahrendts will seek to combine their talents.
The problem is how to ensure that a mass-selling business retains its “cool”. After all, what can even the most attractively designed object say about you as an individual, if everyone else has one too? At Burberry, Ahrendts knew the importance of the difference between common and popular, rebranding a fashion house so that its designs were not associated with just anybody, but were instead sought after by everybody.
At Apple, she’s looking to finesse that manoeuvre by creating a more boutique experience. That may deliver more aspirational shopping, but will it result in greater sales? As it is, Apple’s US stores generate more revenue per square foot than any other retailer of its kind. If you can’t squeeze any more juice than you’re already doing, the only way to increase profit is charge more for a premium service. That’s Ahrendts’s approach.
Whether or not it works, she appears to have the right outlook and personality to fit into Apple’s ultra-committed philosophy.
“There’s something of the cult leader about her,” says one British fashion insider. “She absolutely knew the business inside out. She never let you see a moment of doubt or even questioning. She was relentlessly positive and totally driven.”
Now 55, she is tall, thin and still dressed in Burberry. She’s not the only high-flying woman in Silicon Valley, of course, although it’s still a male-dominated environment, heavily populated by supernerds who have read too much Ayn Rand. If, as Facebook’s Sheryl Sandberg wrote in her bestseller Lean In: “A truly equal world would be one where women ran half our countries and men ran half our homes”, then the Ahrendts household could be said to be doing its bit for egalitarianism, at least between the sexes.
Ahrendts is married to childhood sweetheart Gregg Couch, who quit his own business to take care of their various homes. While she was at Burberry, she told a journalist that aside from running the company she was “here to be a really great wife to my husband. And we have three amazing teens, so that’s three really big jobs. We have a lot of women working here and I always tell them they are mothers first. Those children are their legacy and they have partners and that’s a big obligation.”
“Mothers first” is a laudable rallying cry but not one that’s likely to be adopted in the near future at Apple. This was a company that got rid of Steve Jobs, before he returned to rescue it from disaster. And Ahrendts’s predecessor, John Browett, formerly chief executive of Dixons, lasted only six months in the job before receiving his marching orders.
To realise the full astounding worth of her share options she needs to stick around for a few years. And to do that the girl from New Palestine will need to lead the world’s most profitable company into the promised land of even greater profits. But if it all goes wrong, well, she won’t go hungry.
THE AHRENDTS FILE
Born 7 June 1960 in New Palestine, Indiana. Her father, Richard, was a businessman and her mother a homemaker and part-time model. Married to Gregg Couch, whom she met in elementary school. They have three children.
Best of times It’s all been pretty good news for Ahrendts, though the welcome package at Apple that amounted to almost $74m must have been more than nice. But she rates her 50th birthday party at which BJ Thomas sang Raindrops Keep Fallin’ on My Head as her highlight.
Worst of times Failure at Bendel in the late 1990s when the board pulled the plug on her plans. Financial crisis of 2008, when Ahrendts had to announce $78m cuts at Burberry. Except she seemed to thrive. “I was taught never to waste a good recession,” she later said.
What she says “If you can’t control everything, you can’t control anything.”
What others say “She’s wicked smart.” Tim Cook, CEO Apple. “Ya know what? I don’t work for you.” Her husband, Gregg Couch.
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